Correlation Between GM and ZKB Silver
Can any of the company-specific risk be diversified away by investing in both GM and ZKB Silver at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GM and ZKB Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ZKB Silver ETF, you can compare the effects of market volatilities on GM and ZKB Silver and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GM with a short position of ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ZKB Silver.
Diversification Opportunities for GM and ZKB Silver
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and ZKB is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF and GM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on General Motors are associated (or correlated) with ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of GM i.e., GM and ZKB Silver go up and down completely randomly.
Pair Corralation between GM and ZKB Silver
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the ZKB Silver. In addition to that, GM is 1.91 times more volatile than ZKB Silver ETF. It trades about -0.15 of its total potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.15 per unit of volatility. If you would invest 7,731 in ZKB Silver ETF on September 12, 2024 and sell it today you would earn a total of 364.00 from holding ZKB Silver ETF or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. ZKB Silver ETF
Performance |
| Timeline |
| General Motors |
| ZKB Silver ETF |
GM and ZKB Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ZKB Silver
The main advantage of trading using opposite GM and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ZKB Silver can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ZKB Silver will offset losses from the drop in ZKB Silver's long position.The idea behind General Motors and ZKB Silver ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ZKB Silver vs. ZKB Silver ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Platinum ETF |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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